Recent decisions by Amazon and Bank of America Corp. to ban pay history questions
on job applications follow a trend set by several states and cities that banned the
pay history question in an effort to promote pay equity between men and women.

The intent of the local laws and employer policies is to reduce the impact of historical
pay discrimination on women and minorities. If a person’s future pay is always to
be determined at least in part by what she was paid in the past, the thinking goes,
she will never catch up from having been underpaid to begin with.

National figures show that women make about 80 cents per every dollar earned by men.

Amazon and Bank of America report that their wage gaps aren’t nearly as wide.

Female employees at Amazon earn 99.7 cents for every dollar that men earn doing the
same job, a company spokesperson told Bloomberg Law. The company found the same ratio
exists between minority and non-minority employees.

Bank of America
told Bloomberg News Jan. 25 it would restrict how it asks prospective employees about compensation history
after finding women and minorities at the company make 99 percent of what men and
non-minorities make.

“It’s fairly simple. We did it to be fair to all of our employees,” a Bank of America
spokesperson told Bloomberg Law.

Amazon and Bank of America decided to ban the application question proactively, before
any law affected their headquarters in Seattle and Charlotte, N.C., respectively.

Two Paths for Employers

Banning the salary history question can be accomplished in two ways, employment attorney
Cynthia Jackson, a partner at Dentons in Silicon Valley, told Bloomberg Law. Employers are either
changing the job application to comply with local laws and regulations on state-by-state
or city-by-city basis, or they’re eliminating the question entirely before an offer
is made, Jackson, who educates employers about pay history inquiry bans, said.

“There’s quite a bit of discussion among my clients that are taking this issue all
the way up to the board room,” she said.

A motivator for employers choosing the second option is that they don’t want to take
the risk of administering the wrong application in the wrong area and accidentally
breaking the law, Jackson said.

Google, Facebook, and AmEx Won’t Ask

Other companies have stopped asking the salary history question in the U.S. after
their home state or city banned the question first.

Likewise, New York City-based American Express Co. told Bloomberg Law in an email
it hasn’t asked for salary history during the “sourcing, application and interview
process” since October 2017. New York City’s salary history ban took effect at the
end of that same month.

Wells Fargo & Co., which is based in San Francisco, also
stopped administering a salary history application question when New York City’s law took effect. California
and San Francisco both had bans pending when Wells Fargo made its decision.

Where Are the Bans?

California, Oregon, Massachusetts, Delaware, New York City, San Francisco, and Puerto
Rico have all enacted laws banning employers from inquiring about an applicant’s salary
history.

Philadelphia also enacted a pay history ban, but its law was placed on hold while
it faces a
challenge in court. An oral argument in the case is set for Feb. 2.

Other localities like New Orleans, Pittsburgh, New York state, and most recently New
Jersey have banned the question for state employers.

While the laws are meant to not perpetuate past inequities, critics of have argued
that this could be harmful for women and minorities who already make a fair wage and
could use their salary history to their advantage.

Oregon, California, New York City, Delaware, and Puerto Rico’s laws have taken effect.
The penalty provisions for Oregon and Puerto Rico’s laws, however, didn’t take effect
immediately.

Creating Robust Polices

Pay equity laws will have an impact on the way companies recruit prospective employees
and handle the hiring process.

Companies have historically used salary history as a crutch,
Tom McMullen, a senior client partner at Korn Ferry Institute in Chicago, told Bloomberg Law.
Salary history bans are “going to cause companies to have more robust structures for
market pricing and job evaluation,” McMullen said.

In a survey of about 120 human resources executives, McMullen said, Korn Ferry found
58 percent aren’t sure how salary history bans would impact their business effectiveness.
He said this is likely because many companies are already complying with regulations
or taking a proactive approach.

About 28 percent said the bans would have a positive effect, and 14 said it will negatively
affect their business.

On the Horizon

More cities, states, and businesses will likely ban pay history inquiries over the
next few years,
Andrea Johnson, senior council for state policy at the National Women’s Law Center, told Bloomberg
Law.

Maryland, Mississippi, Rhode Island, New Hampshire, and Florida are all considering
such legislation, Johnson said.

Maryland, which Johnson said has been a leader in equal pay, has a hearing for its
salary history ban bill coming up in February. She said she’s hopeful the legislation that passed in the
state House in 2017 will be enacted.

Seeing companies get rid of the past pay question either in response to laws being
enacted, or proactively, has “proved that this is something employers could easily
do away with,” Johnson said.